LNG

A record wave of LNG capacity coming online by 2030 is shifting the market’s binding constraint from supply to demand, with small-scale LNG (SSLNG) increasingly viewed not just as a niche segment but as a demand-creation tool.

Record US natural gas production and sustained sub-$3.50/MMBtu Henry Hub prices are set to strengthen the economics of both LNG export expansions and new gas-fired power projects and, even as global demand tightens.

Through 2030, global electricity consumption will grow at least 2.5 times as fast as overall energy demand, the International Energy Agency (IEA) forecasts, with emerging Asian economies accounting for near 80% of incremental electricity and related LNG demand to fuel gas peaking power stations.

Asian LNG demand set to fall for a second consecutive year as Qatari supply disruption pushes spot prices to levels that force buyers to cut volumes and switch fuels. Wood Mackenzie forecasts Asia Pacific demand at 257 million tons (Mt) in 2026, down from 268 Mt in the previous year and a peak of 278 Mt in 2024.

The arbitrage for flexible US LNG cargoes heading to Asia is open with spreads between the Japan Korea Marker (JKM) and the Dutch TTF widening, as the tepid recovery of Qatari and UAE LNG exports is unlikely to outpace rebounding Asian demand.

Falling fertility rates and an early peak in global population are set to reshape LNG demand, reinforcing its role in power generation while capping broader growth in gas consumption. Global population could peak at around 8.9 billion by 2053, earlier and lower than previously forecast, as fertility rates decline from 2.6 births per woman in 2007 to around 2.2 today, according to Wood Mackenzie. China’s population is already 9.6 million below the UN’s 2024 projection, underscoring the speed of demographic change.

Venture Global’s average liquefaction fee surged 69% in the second quarter to an average $6.45 per million British thermal units, up from $3.82/MMBtu in the first quarter, as higher LNG prices lifted returns on commissioning cargoes and short-term sales, the company said in a regulatory filing.

The decade of structurally cheap US gas is drawing to a close, with Henry Hub prices forecast to rise towards $5 per MMBtu by 2035 from below $3 per MMBtu, as LNG demand growth tightens domestic balances, Wood Mackenzie said.

The global fleet of LNG-fuelled could almost double from its current base of 850 ships if scheduled deliveries and orders proceed as expected, Shell told investors, projecting LNG bunkering demand to jump from 3-4 mtpa to about 26 mtpa by 2035.

Contract flexibility, strong demand and reliable project execution are bolstering credit profiles of US and Canadian LNG producers, Fitch Ratings said. Longer-term credit upside could fade as competition intensifies, build costs rise and demand visibility weakens, leaving producers reliant on tighter capital discipline and low-cost expansions, analysts warn.